US sues RealPage over alleged price manipulation

The Justice Department Takes Legal Action Against RealPage for Rental Pricing Practices

The Justice Department is suing the company behind a widely used software that helps landlords set rental prices. It alleges that RealPage’s rent recommendation algorithm drives up prices and “deprives renters of the benefits of competition on apartment leasing terms.”

Allegations Against RealPage by the DOJ

In the complaint, the DOJ, along with eight states, claim that RealPage obtains nonpublic rental price information from competing landlords who use the software. RealPage then allegedly feeds this information into its algorithmic pricing software, which landlords can use to get suggestions about their rent rates.

Impact of RealPage’s Pricing Algorithm

As alleged in the lawsuit, “these are more than just ‘recommendations,’” as RealPage also “reviews and weighs in on landlords’ other policies,” in which it attempts to end concessions and discounts for renters. Landlords can also “effectively agree to outsource their pricing function” to RealPage with an “auto accept” option that automatically adjusts their rents based on its algorithm.

Challenges to Competition in the Rental Market

“In a competitive marketplace, each landlord may independently decide to offer concessions so that it can better compete in enticing lessors,” the complaint alleges. “But, again, RealPage seeks to replace fully independent, competitive decision-making with collective action by ending concessions.”

Monopoly Claims and Competitive Advantage

Additionally, the DOJ claims RealPage maintains a monopoly in commercial revenue management software for multi-family dwellings, making up around 80 percent of the market share. RealPage’s “unlawful agreements” with landlords and the sensitive data it receives from them give the company a competitive advantage, the lawsuit alleges.

Conclusion

In conclusion, the legal action taken by the Justice Department against RealPage sheds light on the alleged monopolistic practices and anti-competitive behavior in the rental pricing market. The outcome of this lawsuit could have significant implications for both landlords and renters in the industry.

FAQs

Q: What is RealPage accused of by the Justice Department?

A: RealPage is accused of using its rent recommendation algorithm to drive up prices and limit competition in setting rental rates.

Q: How does RealPage allegedly obtain rental price information?

A: RealPage obtains nonpublic rental price information from competing landlords who use the software.

Q: What competitive advantage does RealPage have according to the lawsuit?

A: RealPage maintains a monopoly in commercial revenue management software, giving it a competitive edge in the market.

Credit: www.theverge.com